British Chancellor Rachel Reeves will deliver her budget on Wednesday after a whirlwind of speculation about which taxes she will increase.
If the budget hits the wrong note, Britons who have set up a new life in the UAE may find even more of their compatriots deciding it is time to move.
Ahead of the statement in the House of Commons, she promised to “push ahead with the biggest drive for growth in a generation”, and insisted she would not “lose control of public spending”.
Ms Reeves said she would “take the fair and necessary choices to deliver on our promise of change”.
Her three priorities for the budget would be cutting the cost of living, cutting NHS waiting lists alongside delivering public service reforms, and starting to reduce the cost of public debt.
Many likely changes have already been trailed as the government tested the water to see how they would be received.
The Chancellor will seek to fill a black hole in the public finances and build up a buffer so she does not have to keep coming back for more taxpayers’ cash.
What is likely to have made the cut?
Mansion tax: A new levy could be applied to some of the nation's most valuable homes in what has been dubbed a “mansion tax”.
The move would reportedly revalue properties across top council tax bands F, G and H and hit 100,000 of them with a new surcharge worth an average of £4,500, with the threshold starting at £2 million. However, caveats might mean the charge is only payable when a property is sold or the owner dies.
The mansion tax idea seems to have come to the fore instead of changes to stamp duty, which is levied on property purchases. Mansion tax had been mooted as a replacement, with stamp duty abolished, but that now seems unlikely. Prime real estate agents have told The National that the potential tax changes affecting property have had an impact on the market, with some high-end buyers holding off in the hope that stamp duty will be scrapped, while others try to get deals over the line before any changes come into force.
International student tax: Prime Minister Keir Starmer unveiled proposals this year for universities to pay a six per cent tax for international students. This is expected to be confirmed in the budget, raising an additional £760 million each year.
Universities have warned it would erase the revenue from a rise in how much they can charge to study, with fees increasing in September for the first time in a decade, to £9,535. Vivienne Stern, the chief executive of Universities UK, said a student tax would be “beyond disappointing”.
Labour’s planned tax on foreign students would deepen the financial crisis engulfing UK universities, the sector has claimed. There are also concerns that it would damage university towns.
“Many universities may be small in national terms, but they are central to their local economies, particularly outside the UK’s strongest cities,” said think tank Centre for Cities. “National reforms that weaken the sector risk cutting across the government’s ambitions for delivering growth everywhere.”
Income tax: The Chancellor may extend the freeze on income tax thresholds which, if she also kept national insurance thresholds at their current rate, would raise around £8.3 billion for the Exchequer in 2029/30.
By not increasing the thresholds she will benefit from a process called “fiscal drag”, where as wages go up people are pulled into paying tax for the first time or into a higher band.
After a press conference and briefings aimed at preparing the country for a manifesto-busting increase in income tax, it had appeared income tax was going up by 2p in the pound. Ms Reeves then abandoned the idea of becoming the first Chancellor in half a century to take that step.
The measure was dropped from the “hokey cokey budget”, as Speaker Sir Lindsay Hoyle described it, after the Treasury apparently received forecasts from the budget watchdog which were not quite as grim as first feared.
Salary sacrifice: The Chancellor might introduce limits on how much employees can stash in their pensions under salary sacrifice schemes before it becomes subject to national insurance. Reports suggest she could cap this at £2,000 a year, which would reduce how much people put away in their pension pots and put a dent in take-home pay for those who use the scheme to stay in a lower tax band.
Tax for electric vehicles: The Chancellor is thought to be considering a 3p-per-mile tax for EVs to protect revenue as people shift away from petrol and diesel – and the fuel duty that brings in to the Exchequer. She will add £1.3 billion to a grant that knocks up to £3,750 off the price of an electric vehicle as part of a package that will also put £200 million towards the roll-out of charging points.
Rail fares: They will be frozen, saving commuters on pricier routes more than £300 a year. It is one of a series of measures aimed at easing the cost of living despite the increased tax burden many people and businesses are likely to face.
Tourist tax: Mayors in England seem likely to get powers to charge tourists for staying overnight in their cities, a long-held desire of London Mayor Sadiq Khan. It could be as much as £15 per night if the New York model is followed. Devolved Wales and Scotland already have nightly tourism taxes. Angela Rayner had pushed for such a tax before she resigned as deputy prime minister, and clashed with Ms Reeves on the issue. The Chancellor appears to be ready to make an about-turn.
Prescriptions: The cost of an NHS prescription in England will be frozen at £9.90.
Taxi tax: There are rumours that Ms Reeves could impose 20 per cent VAT on all private hire vehicle journeys, meaning that Uber trips could become more expensive. It is thought it could raise £750 million.
Two-child benefit cap: As pressure has piled up, Ms Reeves is expected to scrap the limit that restricts child tax credit and universal credit to the first two children in most households. Estimates vary on how much this would cost, with the Resolution Foundation estimating around £3.5 billion by the end of this parliament (2029/30), while the Child Poverty Action Group and Joseph Rowntree Foundation have lower calculations of around £3 billion.
Crackdown on benefits fraud: Ms Reeves will seek to raise £1.2 billion by March 2031 by extending a crackdown on fraudulent and mistaken universal credit payments via the targeted case review scheme.
What’s been scrapped?
Exit tax: There had been talk that a “settling-up” charge would be applied for people choosing to relocate abroad, as the government became alarmed at the number of wealthy people opting to head for countries such as the UAE. Tech entrepreneur Herman Narula suggested it was the final straw in his decision to move to Dubai, adding to his concerns about a lack of UK opportunities for start-up businesses. It now seems that the government has scrapped the plan.
Homes tax: The Treasury had been considering plans to raise money from a new tax on the sale of homes worth more than £500,000.
Government officials were said to be looking at a potential property tax, which would replace stamp duty on owner-occupied homes.
The “homes tax” would have disproportionately affected homeowners in London and the south-east, where properties are more expensive. The average UK house price stands at £282,766, compared with £673,000 in London.
It was thought this tax, covering England and Wales, could help to build a model for local levies to replace co
